In a surprise move, former Uber CEO Travis Kalanick appointed two new directors to the company's board. This was performed without consulting the members, so the additions came as a shock.
The move is seen as Kalanick's way to regain power as the company faces various critical decisions, including plans to go public and a possible investment from SoftBank Group.
Two Execs Join Uber As New Directors
The appointees were Ursula Burns, CEO and chairwoman of Xerox; and John Thain, former CEO of CIT Group Inc. They represent Uber's 10th and 11th directors. This becomes effective Friday, Sept. 29, as The Wall Street Journal reports.
Kalanick resigned from Uber in June after facing criticisms on his mode of leadership amid a series of scandals — including sexist workplace abuse, "greyballing," a controversial mishandling of a rape case, and a high-stakes trade secret theft lawsuit with Waymo — it was facing at the time and continues to face today.
Kalanick made the decision without consulting the members. He controls three board seats, granted to him as part of a $3.5 billion investment deal from a Saudi wealth fund last year.
The move caused a massive escalation of tension at Uber, as Recode reports, which is an unfortunate downturn given that things seemed to be looking great for the troubled company as it appointed Dara Khosrowshahi as the new CEO.
Kalanick says Burns and Thain will fill board seats he previously controlled.
Recode's sources said Kalanick's move was fueled by Khosrowshahi's proposal to eliminate shares with more voting power and shift to a structure in which one share is equivalent to one vote. Some shareholders such as Benchmark were in favor. It makes sense — such a structure would probably help Uber reel in new investors should it decide to go public.
But Kalanick didn't budge.
Kalanick Reasserting His Power
"For Travis, it is all about keeping power," said a source.
In all fairness, it's easy to see why he would feel threatened. Benchmark sued Kalanick this summer as a way to remove him from power, and it also had a hand in taking away his CEO position.
The two are currently involved in a debate over a possible investment from SoftBank, which could ultimately change Uber's mode of governance and give way to more board seats. Those talks are ongoing, according to sources.
The New York Times speculates Kalanick's action as a power move. Somehow, he did this to reassert some sort of control. Looking at it from a different perspective, the turmoil certainly presents a new problem for Khosrowshahi, who now has to deal with a divided board.